GE, Nvidia, Nordstrom, Bitcoin All Tank, And The Fed Notices

Friday, November 16, 2018
By Paul Martin

By: John Rubino
Friday, 16 November 2018

The sense that something isn’t right out there just got a lot stronger. And the Fed, in response, is now tiptoeing back towards QE. Let’s start with the sudden bad news:

Chipmaker Nvidia plunges after missing on revenue and guidance

(CNBC) – Nvidia stock fell as much as 19 percent Thursday after the company reported earnings for the third quarter of its 2019 fiscal year, which ended on Oct. 28.

The chipmaker fell short of analyst expectations on guidance despite beating on earnings and revenue estimates. The company’s cryptocurrency mining products suffered a hefty decline in that quarter, and the trend continued in the fiscal third quarter.

It has become less profitable to use graphics processing units, or GPUs, for mining, according to a recent analysis by Susquehanna. To mine cryptocurrency, computers compete to solve complex math problems in exchange for a specific amount of bitcoin or ethereum. But as both currencies have sunk in value, so too has this segment of revenue for Nvidia.


Why GE’s Credit Problem Is a Warning to All Debt Investors

(New York Times) – General Electric may be the canary in the credit market’s coal mine.

The company’s bonds fell sharply this week even as an asset sale briefly lifted its shares. That’s a warning shot for all debt investors. American companies owe more money than ever, and the quality of their loans and bonds has deteriorated. Rising interest rates and slowing growth could make this a big problem.

The ailing $75 billion conglomerate is an extreme case, but it exemplifies much of what has happened in corporate America and around the world over the past decade. Historically low interest rates fueled a massive borrowing boom, enabling healthy companies to expand operations or buy back shares, and zombies to keep staggering along.

United States nonfinancial corporate debt stands at a record level of more than 73 percent of gross domestic product, according to the Bank for International Settlements. It never exceeded 65 percent before the 2008 financial crisis. France’s corporate debt-to-G.D.P. ratio has risen by nearly a third over the past decade, and China’s by more than two-thirds.

This growing quantity has been accompanied by a marked decline in quality. GE, which recently lost its coveted single-A credit rating, is again illustrative. Many other U.S. companies have been downgraded. As a result, the debt of those carrying triple-B ratings — the lowest investment-grade category — more than doubled from pre-crisis days to a record $2.7 trillion at the end of 2017, according to S&P Global Ratings.

The Rest…HERE

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